My father recently died, leaving my mother fairly wealthy with phone stocks (the old AT&T breakup group). We need to decrease her concentration in the group, diversify, but also secure monthly income to supplement here decreased pension and Social Security income. I'm obviously looking for the best yields available, but with a good level of safety. Can I improve upon the 6.66% Fidelity is currently paying within their Money Market? Are there three or four other places to invest for current income to add safety through diversity on the income side? Prefered shares, High Quality Corporate Bonds, Bond funds? Any suggestions?

You did not mention your mother's age. Even if she is 60 she may live another 30 or 35 years. Inflation can cut into the purchasing power of MM, Bonds, and any of the Fixed Income types of investments. Can you imagine the lost purchasing power if someone had become a widow in 1965 or 1970 and had put all their money into CDs or MM Funds then? I am not saying she should put all her phone stock money into the market nor should she put it all into Fixed dollar instruments. Depending on her age I think it would be prudent to consider diversifying by putting part of her phone stocks into the S & P 500 Index Fund, or the Total Stock Market Index Fund.

However, if she needs all the income from these funds to pay living expenses then you may not be able to do this.